Zurich has agreed a longevity swap of more than £2bn of pension liabilities from the National Grid in its Electricity Supply Pension Scheme.
The insurance agency said the transaction would protect National Grid against "risk of rising costs" that have come about from 6,000 pensioners and future dependant members living longer than expected.
It will cover around two-thirds of National Grid's pension liabilities.
In the so-called "longevity swap deal" Zurich has also reinsured a significant portion of the risk with Canada Life Reinsurance. Aon acted as lead transaction advisor to the deal.
The deal is the seventh longevity swap Zurich has entered into in under two years, taking the total liabilities hedged by pension schemes with Zurich to around £3.5bn.
"This is our first bespoke intermediated longevity swap and by far our largest deal to date," said Greg Wenzerul, Zurich's head of longevity risk transfer. "
"The advantages of our intermediated solution include efficiency of execution due to the clean transfer of risk, a clear route to dealing with changing future circumstances, and the inherent benefits of transferring risk to a UK regulated insurer."
Andrew Bonfield, finance director for National Grid, added:
We are very pleased to announce the completion of this longevity insurance which covers around two-thirds of the liabilities of the National Grid Electricity Group pension liabilities.
This demonstrates our ongoing commitment to the security of our pension arrangements, and represents a significant step in our long-term strategy to manage down the level of pensions risk for National Grid shareholders and electricity consumers.